Speaker: Jonathan Heathcote, Federal Reserve Bank of Minneapolis

Time: 10:00-11:30 am, April 10, 2023, GMT+8

Venue: Zoom Meeting ID: 818 2680 6629 Passcode: 974895

Abstract:

The U.S. net foreign asset position has deteriorated sharply since 2007 and is currently negative 65 percent of U.S. GDP. This deterioration primarily reflects changes in the relative values of large gross international equity positions, as opposed to net new bor-rowing. In particular, a sharp increase in equity prices that has been U.S.-specific has inflated the value of U.S. equity liabilities to the rest of the world. We develop an international macro finance model of flows, stocks, and valuation of the U.S. corporate sector and the current account and net foreign asset position of the United States to interpret these trends. We find that the welfare impact of these trends on a representa-tive U.S. household has been quite negative given the large share of U.S. equity owned by foreign investors.

Biography:

Jonathan Heathcote is a monetary advisor in the Research Department of the Federal Reserve Bank of Minneapolis. Between 2006 and 2008 he was an economist in the International Finance Division of the Federal Reserve Board of Governors. From 2002 to 2008 he was an assistant and then associate professor at Georgetown University. Jonathan has also taught at the Stockholm School of Economics and Duke University, and the Stern School of Business, New York University. Jonathan received a B.A. in philosophy, politics, and economics from Keble College, Oxford University, in 1993, and his Ph.D. in economics from the University of Pennsylvania in 1998. His work has appeared in several prestigious publications, including the American Economic Review, the Journal of Political Economy, and the Review of Economic Studies, Quarterly Journal of Economics, etc. He is currently an editor of the Review of Economic Dynamics and the Co-Editor of the Journal of Public Economics.

Source: National School of Development